c Irate college students march on Washington and demand a reduction in the

C irate college students march on washington and

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c. Irate college students march on Washington and demand a reduction in the price of Frisbees. An even more  concerned Congress votes to repeal the price floor and impose a price ceiling $1 below the former price floor. What  is the new market price? How many Frisbees are sold? 2. Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (In fact,  both the federal and state governments impose beer taxes of some sort.) a. Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers,  the price received by producers, and the quantity of beer sold. What is the difference between the price paid by  consumers and the price received by producers? b. Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers,  the price received by producers, and the quantity of beer sold. What is the difference between the price paid by  consumers and the price received by producers? Has the quantity of beer sold increased or decreased? 3.A senator wants to raise tax revenue and make workers better off. A staff member proposes raising the payroll tax paid by firms and using part of the extra revenue to reduce the payroll tax paid by workers. Would this accomplish the senator's goal? Explain. 4.If the government places a $500 tax on luxury cars, will the price paid by consumers rise by more than $500, less than $500, or exactly $500? Explain. 5. Congress and the president decide that the United States should reduce air pollution by reducing its use of  gasoline. They impose a $0.50 tax for each gallon of gasoline sold. a. Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram. b. If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the  quantity of gasoline consumed? Explain with both words and a diagram. c. Are consumers of gasoline helped or hurt by this tax? Why? d. Are workers in the oil industry helped or hurt by this tax? Why? 6. A case study in this chapter discusses the federal minimum-wage law. a. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply-and- demand diagram of the market for unskilled labor, show the market wage, the number of workers who are  employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled  workers.
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